Balance Sheet

The Assets = Liabilities + Owner's Equity Equation

What exactly is the balance sheet? In short, a Balance Sheet is a report that gives you a summary of the financial situation of a business on any given date. But what does that mean exactly?

It will show you the total value of your company's assets, liabilities, and equity.

Interestingly enough, it got it's name because the total of the assets is always exactly equal (in balance) to the combined total of the liabilities and equity.

The formula looks like this: Assets = Liabilities + Owner's Equity. This is also otherwise known as the Accounting Equation. 

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Balance Sheet Accounts

There are many different bookkeeping accounts that appear on the monthly and annual report.

The different bookkeeping accounts you will find can be thought of as all of the things (including money) that you own as well as all of the debts that you owe.

This would include things like bank accounts, property (buildings), equipment, furniture and amounts that people owe you (Accounts Receivable).

This also includes all of your liabilities such as bank loans, credit cards, and amounts you owe to other people (Accounts Payable).

Additional types of bookkeeping accounts that you will find are the equity accounts. These indicate what your business is worth and include all of the money (investments) that the owners have put into the company as well as all of the money, draws or distributions that the owners have taken back out.

The equity of your company is the total of all of your assets (what you own) minus the total of all of your liabilities (what you owe). This is also known as the net worth of your company.

When determining what you equity is, the accounting formula changes. Now the formula would look like this: Equity = Assets - Liabilities.

Sample B/S Report

Your b/s report may be long or short depending up the type of company you have, how many assets, furniture, equipment, and loans you have.

However a report will always have the same overall look and feel. A sample report might look something like this...

Balance Sheet

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What Other Visitors Have Said

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Theft on Balance Sheet 
Where does theft fall into the equation on the balance sheet? A business, starting with $102K in assets and $102K in liabilities, takes on a $50K loan, …

School Balance Sheet Assignment 
I have a school balance sheet assignment that I need help with. I would like to know why my balance sheet is not balancing.

LLC Partner Payments on Balance Sheet 
Where do you show paying LLC partners out of the profits on the balance sheet? We do not have a salary for the partners. We just divide up the profits …

Is Accounting Equation an Ideal or Reality? 
I have a situation where my business went through a reasonable period. It has recently not been doing well. In the good times I bought assets which …

Adding To The Balance Sheet 
How do you Account for the occurrence of business expenses when the balance sheet almost tallies changes to it's pending assets in expected accruals and …

Suspended Loss On Balance Sheet 
Where on the balance sheet should a suspended loss be posted and shown?

Prepaid Utility Deposit On Balance Sheet 
Where is a prepaid expense deposit to open a utility account listed on the balance sheet?

How To Make Balance Sheet 
I am confused as to how to make a balance sheet. Will you please provide more information on what I should do?

Balance Sheet Doesn't Balance 
Is there anything in particular you can advice me to check when assets don't equal liabilities? I would appreciate it, thank you.

Income Tax Payment on Balance Sheet 
Why does my income tax payment not show on my end of year financial statements from my accountant?

Home Value On Balance Sheet 
Should I show the value of my home on the balance sheet minus the mortgage amount? Or should I not show it or list the home as an asset until the mortgage …

The Balance Sheet 
Why do liabilities equal to total assets on the balance sheet?

Tax Return To Enter Balance Sheet 
Hi, I have a question. I want to do bookkeeping for small businesses. If a company is s-prop and I need to do their books, do I need the tax return to …

Balance Sheet And Income Statement Differences 
What is the difference between balance sheet items and income statement items?

Balance Sheet Shares 
When preparing a balance sheet and you have public shares to add to your assets, do you list them by the book value or the market value at your year end? …

Balance Sheet Account Reconciliations 
Very simply, how does one do reconciliations of balance sheet accounts?

Balance Sheet Account Withdrawals 
Please state the balance sheet effects of each of the following and provide an explanation: The owner withdraws R160 from the firm's bank account for …

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